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Provident Financial PLC said on Thursday it swung to profit in 2021 and noted robust trading across its three businesses in the first quarter of the new year.
The Bradford, England-based subprime lender swung to a pretax profit of £4.1 million in 2021 from a loss of £113.5 million the previous year. Revenue fell 13% to £534.6 million from £615.4 million in 2020.
Provident explained the swung to profitability was driven by a ‘favourable’ macroeconomic backdrop to the end of 2021. The company took significantly less impairment charges in 2021, charges fell to £50.4 million from £312.6 million the year before. In its credit card division specifically, impairment charges fell to £3.7 million from £233.3 million.
Chief Executive Malcolm Le May said: ‘I am pleased to report that the group's financial performance in 2021 improved significantly year-on-year and, as a result, our adjusted profit before tax from continuing operations was marginally ahead of market expectations. We have exited high-cost short-term credit, and we are now focused on providing mid-cost credit products to over 1.6 million customers.’
Adjusted pretax profit from continuing operations surged to £167.8 million in the year from £27.8 million. Provident said this also reflected lower impairments in 2021 compared to 2020, driven by provision releases.
Provident proposed a dividend of 12 pence per share for 2021. In 2020 no dividend was paid.
In the first quarter of 2022, Provident said it has seen ‘positive momentum’ across its three businesses quarter-on-quarter.
In credit cards, new account bookings are ahead of expectations, and in vehicle finance, demand remains buoyant, the company said. ‘In the personal loans business, the pilot phases for Vanquis Bank Loans and Sunflower Loans continue to progress encouragingly,’ it said.
Looking ahead, Provident said it is well positioned to cope with the uncertainty that may arise from the current inflationary environment in the UK.
Shares in Provident were up 1.5% at 322.00 pence on Thursday morning in London.
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